Data is a key factor in determining many critical business decisions. As a business owner, you’re most likely tracking multiple points of data each day, from transactions and payroll to projected profits.
While there are many metrics out there that are important to track for business growth, there are a few high-level metrics that can uplevel your business operations. To that end, eight members of Young Entrepreneur Council discuss some high-level metrics your business should be tracking and why.
1. Product Engagement
Without a doubt, more businesses should be tracking product engagement as a metric. It is essential that you know how often your customers interact with your product. The more they do, the happier they tend to be, and the less churn you will experience. Customer satisfaction is an unspoken element of engagement. It’s easy to become engrossed in your own technology, but choose to let the market and the customer guide you. If customers aren’t using the product, they aren’t getting the value. Have your ears and mind open to the customers and market and help them define what you’re doing. – Kevin Marcus, Versium Analytics, Inc.
2. Earnings Before Interest, Taxes, Depreciation And Amortization (EBITDA)
A high-level metric that most entrepreneurs do not track, but should, is EBITDA. EBITDA stands for your earnings before interest, taxes, depreciation and amortization. This number determines the value of your business in many industries should you choose to exit in the future. Instead of focusing on revenue, EBITDA gives founders a much better understanding of the true enterprise value of their company. – Jessica Fialkovich, Exit Factor
3. Net Promoter Score
Net Promoter Score (NPS) is an important metric that a lot of large companies use, but is also one companies of all sizes should be using. It instantly tells you what your customers think of your business. Will they recommend your business to others? Are they satisfied with your business or not? Are they happy or not? Are they loyal to your business or not? Those questions are essential to understanding your brand reputation today and identifying problems that need to be fixed before they negatively affect your sales and your profits. Using NPS, you can identify your best customers who will advocate your brand, which can help you strategize marketing investments in the future to attract more of your ideal customers. It’s a critical metric for every business. – Jonathan Prichard, MattressInsider.com
4. Lead Conversion Rates
I used to think I had a sales problem until I realized I had a conversion problem. In other words, we didn’t have a shortage of leads—we had a conversion problem. When we identified how many leads contacted us, how many of those leads were qualified and how many of those qualified leads actually hired us, it gave us a better perspective on what we were doing right and what we were doing wrong that we needed to change. We found that the leads who we spoke to in the morning got more value than the leads who spoke to us in the afternoon and that by charging a consultation fee, which our competitors didn’t, we got serious, qualified leads who were ready to hire our professional services. Basically, work smart and not hard using metrics to improve procedures. – Givelle Lamano, Lamano Law Office
5. Sales Growth YTD
A very important metric every business should track is their sales growth year to date (YTD). Tracking this metric can help you understand the rate at which your company’s sales revenue is changing. Based on this metric, you can also know where your business stands. The attempt should be to increase your sales every month or at least keep them constant to ensure that your business is on the right track. – Thomas Griffin, OptinMonster
6. Customer Lifetime Value
One high-level metric that businesses should be tracking is the customer lifetime value, or CLV. It’s a measure of the total profit a business earns from a customer. There are a few reasons why you should track your CLV. First, by understanding how much profit each customer brings in, you can make better decisions about where to allocate resources. It’s also a great way to identify and target high-value customers. And CLV can help predict future revenue. This is because customers with a higher CLV are more likely to continue doing business with a company, and they are also more likely to refer new customers. – Blair Williams, MemberPress
7. Employee Productivity
While businesses should track a variety of metrics, I think more businesses should track employee productivity. This is because employee productivity is a key indicator of a company’s success and can be tracked relatively easily. Additionally, tracking employee productivity can help companies identify areas where they may need to make changes in order to improve their overall performance. – Syed Balkhi, WPBeginner
8. Customer Attrition
One metric that’s often not looked at is customer attrition, or the customers you lose per month or year. If you have customer data, and not just emails, it would be nice to look at each customer’s purchasing trends and then question why they stopped buying. The attrition rate shows you the gaps in your product as well as where you can get better. It’s a full-cycle metric, and if a customer stops purchasing, and you have data, a quick non-intrusive call will explain the reasons and, who knows, maybe this call will bring a customer back to you if you can showcase your strength. Zero attrition is just not possible—consumers of today have too much choice!—so keeping it within a range is recommended. – Candice Georgiadis, Digital Day